The Property Tax Conundrum

We hear an awful lot about why people are leaving New Jersey – taxes too high, cost of living is unaffordable, not enough private sector work. Lost in those valid arguments is a solid exploration of why people move here. That is the other side of the coin and it is an equally important discussion to be having.

People like their individual towns. They move here and stay here because they like that quaint hometown feeling. They like having their own town hall. They like their own police force, and they like that the schools are good. People enjoy the Penny-Lane romanticization of riding down main street with a fireman washing his truck, waving and calling your son by name. It’s not a fantasy. For some it is real life. But guess what? Those things cost money. The town hall requires maintenance and upkeep, the Police Chief probably makes $125,000 and those schools are “good” because they have nice grassy fields, smart committed teachers and a lunchroom that won’t make you gag.

So, when you start cutting money from those things people get nervous. They are not nervous yet, because right now there is this anti-property tax fever that has led to what some have argued is an arbitrary and perhaps hasty 2% cap.

The counter argument to supporting a cap above all other considerations is this: people might be even more inclined to leave the state if all those things that made it so appealing in their chosen town start to falter. Suddenly, that once cute town hall needs a coat of paint and looks shabby and rundown since the local Public Works Department laid off half it’s staff. That Police Chief is gone, along with a handful of those nice cops who you once played football with in High School. And finally, the school no longer holds a competitive advantage because young, qualified teachers don’t wanna relocate there…the pay is too low.

Another point to consider – we are living in a unique period of history. The economy really is as bad as it has been in several generations. But it will turn around. These things are cyclical. And if there is one thing we have learned about a crisis it’s that it doesn’t always lend itself to rational policy making. Particularly when the decisions that will greatly impact communities are made under duress over a holiday weekend.

I mean, look what happened with TARP. In 2008, the economy was in a full meltdown. Congress rushed in to pass the nearly $700 billion bank bailout. They attached no requirement that the banks then use that money to lend. And they put no stipulations on how it should be spent. I am not an economist so I don’t know whether that bailout was even necessary. My thought is that you let the guys who gambled with other people’s money go down. Nothing would have prevented a repeat performance more than letting the Capitanes of Industry go down with their respective ships. But regardless of what the right response was or should have been, it’s probably safe to say the legislation could have been a little less “we trust you’ll do the right thing” and a little more “this will guarantee you do the right thing.”

Finally, there is the Reform New Jersey Now element. This organization has been running ads urging action on the cap. Democrats have called on the Governor to disclose the donor list. Mike DuHaime, the Governor’s campaign strategist has said they will do so by the end of the year. The group’s tax status is such that they do not have to reveal that donor list. However, is it strange that this unknown group of people are driving the policy agenda in New Jersey? Not only driving it, but making sure lawmakers agree to a cap deal over July 4th weekend, and that it gets voted on within a week. Does that make good policy? Maybe. We’ll see.